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The university is in a strong financial position year-over-year, and consistently reports positive operating results.

CMU explores exciting opportunities to grow our academic offerings to meet the evolving needs of students and professionals — including online master’s and professional education programs.

Growth in sponsored research continues to be a key priority as the university expands possibilities in exciting cross-disciplinary initiatives, such as the Robotics Innovation Center, the Richard King Mellon Hall of Sciences, and the CMU Cloud Lab.

• The university is rated by the credit rating agency Standard & Poor’s (S&P). In 2023, S&P re-affirmed CMU’s credit rating as “AA," with a “positive” outlook. Both of these are indicators of consistently strong financial performance and health.
• There are also several financial ratios (e.g. net assets to debt) that the university proactively monitors to assess overall financial health and position.

Institutions of higher education like CMU manage multiple, discrete budgets to track income and expenses. Two examples are “operating budgets” and “capital budgets.”

• Operating budgets plan for the financial impacts of the day-to-day operations of the university by estimating annual revenues and expenses. The operating budget covers a period of one fiscal year (July 1 through June 30 of the following calendar year), and encompasses an academic year within the fiscal year (summer terms are captured within the fiscal year in which activities take place). Operating budgets also include Education & General expenditures as well as Auxiliary Enterprises.
  
  • Education & General includes Instruction and Departmental Research (e.g., faculty and staff, graduate assistants, instructional equipment); Separately Budgeted Research (e.g., research centers); Public Service (e.g., continuing education programs, community services); Academic Support (e.g., library, academic computing, and laboratory instrumentation); Student Services (e.g., Registrar, Admissions, Career and Professional Development Center, and Student Life); Institutional Support (e.g., President, Vice Presidents, Provosts, University Advancement Offices); Operation & Maintenance of Infrastructure and Buildings; Scholarships and Fellowships.
  • Auxiliary Enterprises are financially self-sufficient, deriving income from fees and user charges (e.g. housing, dining, parking, university stores, and printing services).
• Capital budgets focus on the completion of university initiatives, prioritizing campus infrastructure and required technology investments. Funds in the capital budget are spent over a period of time (usually several years) and include such items as: new building construction, building improvements, replacement equipment, and technology implementations. The cost of capital projects are captured in the operating budget as depreciation expense for the duration of the asset’s useful life.

The vice president for finance and chief financial officer maintains overall responsibility for development and administration of the ºÃÉ«ÏÈÉúTV budget, in collaboration with the president, other vice presidents, and academic deans.

• The university presents an operating budget and a capital budget each year for approval by the Board of Trustees.

CMU follows Generally Accepted Accounting Principles (GAAP) as defined by the Financial Accounting Standards Board (FASB), and budgeting guidance as established by the .

Operating margin is a measurement of the available funds provided by day-to-day operations after paying for expenses.

• If there is an excess of available funds, the operating margin would result in a surplus for the university. Conversely, if expenses are greater than the funds provided by operations, the result is a deficit.
• Overall, any operating surplus generated by the university does not represent a substantial percentage of the total annual operating budget.

Nonprofit organizations routinely carry surplus funds as reserves, which improve cash flow and overall stability. However, surplus funds at a nonprofit are not treated like profits at a private company and may have restrictions for use. See the answer to "How does CMU use surplus funds to support strategic initiatives?’ below for more information.

It is important to note that operating surpluses and/or reserves are available only on a one-time basis. Similar to a personal savings account, these funds may be reserved to cover emergency expenses or an unanticipated need for cash, but are not automatically replenished annually.

The operating budget is developed to reflect a conservative positive operating result which is used to support the advancement of the institution through investment in strategic initiatives. As a general rule, the university does not budget an operating deficit.

• After a budget is approved by the Board of Trustees, it is not unusual to experience unanticipated fluctuations that can favorably or unfavorably impact the budgeted operating margin. Some examples include:
  • Unexpected donations, resulting in increases to revenue.
  • Fluctuations in enrollment (such as those seen during the pandemic), which can result in increases to revenue as well as unanticipated increases to expenses.
  • External factors such as market impacts on interest rates, supply chain challenges, and inflation.
  • Reduced salary expenses as a result of unfilled positions, investment income surpassing anticipated returns, and ongoing expense management may also result in a more favorable margin.
• Operating surpluses are typically a result of one-time events that occur in the fiscal year; therefore, they are not available to balance future years' budgets.
• If a surplus is the result of a change that will be ongoing and continue into future years — such as a lasting increase in revenue or a sustained reduction in an expense — the value of that surplus can be used to offset any required future budget reductions.

In general, the majority of the university’s surplus resides within the academic or administrative units that created the surplus and are restricted for future investment by that unit.

Surplus funds may also have other various levels of restrictions placed upon them (e.g. gifts to fund certain scholarships or building projects, or research grants that can only be used for specific initiatives).

Surplus funds without a specific restriction may be used to support university-wide strategic initiatives. Priority projects may include renovation and/or expansion of facilities, one-time implementation costs for strategic information technology projects, start-up costs and pilot projects for program expansion and new programs, and strategic property purchases. Some examples of how surplus funds have been used in the past are:

• Expansion of the Cyert Center for Early Education
• Renovation of the Etna Warehouse
• Reinvestment of housing surpluses to support CMU’s Housing Master Plan, which includes projects such as the Fifth and Neville Apartments, Forbes Beeler Residence Hall, Fifth and Clyde House, and Fairfax Apartments.
• One-time payments made to eligible employees to help offset inflation

ºÃÉ«ÏÈÉúTV has defined and prioritized several strategic "pillars" to further its mission of transformative social impact. To support these priorities, the university consistently searches for efficiencies to ensure a strong financial position. In the short term, these critical efforts provide the university with the stability and agility to serve the long-term needs of our students, seize emerging opportunities, and propel society forward through bold leadership.

As defined by CMU President Farnam Jahanian, the university’s strategic pillars include:

• Driving the Future of Education: Universities today are preparing students for careers that have not yet been invented, with the COVID-19 pandemic acting as an accelerant for seismic shifts across our workforce. With distinctly interdisciplinary curricula and world-leading expertise in the science of learning, Carnegie Mellon is driving the future of education. We are increasing access and affordability so that students of all backgrounds can come to CMU and take advantage of our personalized, data-driven and future-focused educational model. By emphasizing high-impact experiences, training in uniquely human skills and by leveraging technology as a driver of pedagogy, CMU is preparing students for life-long success in a rapidly changing world.
• Enhancing the CMU Experience: The time that students spend at Carnegie Mellon profoundly shapes who they will become as society’s change makers. CMU has worked intentionally to develop an experience that helps students to thrive, while cultivating a sense of community and connection that brings deeper meaning to our individual and collective work. Campus resources support a sophisticated, integrated and proactive approach to wellness, which is grounded in the belief that a healthy mind, body and spirit is paramount to ensuring lifelong success. In every facet of the CMU experience, we are committed to leading with these values, as well as strengthening our foundation in inclusion, respect, and freedom of expression.
• Leading at the Nexus of Science, Technology and Humanity: At a time when our strengths in emerging technologies and cutting-edge science are aligned with the needs of society, CMU is working across disciplines to ensure scientific and technological innovation can positively shape our day-to-day lives, improve the human condition, and expand our knowledge of the world. Our seamlessly connected and multidisciplinary ecosystem is creating, defining and accelerating the future of scientific discovery and engineering innovations in a way that is ethical, equitable, inclusive, and responsible. Supported by world-class talent and targeted investments in the future of discovery, we are advancing our leadership at the nexus of science, technology and society.
• Broadening Our Societal, Cultural and Economic Impact: What truly sets CMU research and creativity apart is our willingness to leave the ivory tower, cross boundaries and engage in collaborative discussion and expression. Through these relationships, we are shaping modern culture, probing complex societal challenges and driving regional and national economic growth. By working arm-in-arm with partners who are driving change across society, we are helping to expand the geography of innovation and ensure that all can benefit from the creativity of our brilliant faculty, students, staff and alumni.